Peter Schiff Says the Government Caused the Student Loan Crisis

Peter-SchiffHere’s Why the Government Caused the Student Loan Crisis

Easy lending rules and failing government policies have created a student loan bubble, pushing the price of a college education out of reach for most American families. At least, that’s the opinion of famed market analyst Peter Schiff.

Today, the average college student graduates with over $35,000 in debt. (Source: Class of 2015 has the most student debt in U.S. history,, May 9, 2015.) More than half of young Americans view student loan debt as a major problem. (Source: Student Debt Viewed as Major Problem, Harvard University, Last Accessed September 23, 2015.)

Should the U.S. Government Address This Issue?

No, says Schiff. In an interview with senior Mises Institute fellow Tom Woods, the widely-regarded resource investor argues government policies have actually created a student loan bubble.  Their efforts to make education more affordable have in fact made it more expense. (Source: Peter Schiff on His Forecasts, Past and Present, Tom Woods TV, September 3, 2015.)

Here’s Schiff’s explanation. It has been lightly edited for more clarity.

The government all of a sudden sees a bunch of college students and they want their votes. So how do they get their votes? “Hey, we’ll make it easier for you so you don’t have to go out and get a job to go to college. You don’t have to do that. We’ll loan you some money. We’ll guarantee your loans so you can borrow money at a really low rate of interest. It will be like a U.S. Treasury [Note].”[…]

[…] The government solution is, “We’ll make more money available. We’ll make more loans. We’ll make more scholarships.” The universities say, “Great! We can raise our prices even faster now because our customers have even more government money to pay the tuitions.

While the government’s intentions may be good, the actual consequences of these policies are disastrous. Graduates are saddled with exorbitant debts. Their degrees often provide little help in the job market.

Schiff continues:

You have students graduating waiting on tables and driving taxi cabs with $50,000 to $100,000 worth of debt. They majored in nothing. They studied Liberal Arts. They wasted their time. They wasted money. There’s no hope of ever paying it back. It’s a typical example of how the government destroys everything it gets into. The government wanted to make college more affordable. They made it more expensive.

Who will pay the bills for all of these basket weaving and French literature degrees? Taxpayers. The Congressional Budget Office now estimates the federal student loan program will cost the government $27.0 billion over the next ten years—a 30% increase from last year. (Source: Updated Budget Projections: 2015 to 2025, Congressional Budget Office, March 9, 2015.)

You can watch Peter Schiff’s entire conversation with Tom Woods here. His commentary on the student loan crisis begins at 22:05.

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